U.S. v. Blocker, 95-60286

• Citation: 104 F.3d 720
• Decision Date: 16 January 1997
• Docket Number: No. 95-60286,95-60286
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Perry G. BLOCKER, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 720

104 F.3d 720

UNITED STATES of America, Plaintiff-Appellee, v. Perry G. BLOCKER, Defendant-Appellant.

No. 95-60286.

United States Court of Appeals, Fifth Circuit.

Jan. 16, 1997.

Victoria May, Assistant U.S. Attorney, John Morgan Dowdy, Jr., Office of the United States Attorney, Jackson, MS, Peter Hickman Barrett, Assistant U.S. Attorney, U.S. Attorney's Office, Biloxi, MS, for plaintiff--appellee.

Kenneth A. Rutherford, Barry H. Powell, Alston, Rutherford & Van Slyke, Jackson, MS, John Mark Colette, John M. Colette & Associates, Jackson, MS, for defendant--appellant.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GARWOOD, HIGGINBOTHAM and BENAVIDES, Circuit Judges.

PER CURIAM:

Perry G. Blocker appeals his convictions and sentences for the offenses of mail fraud and bank fraud. Blocker argues, among other things, that a search conducted by a Mississippi insurance examiner, whom he contends was acting as an agent of the United States Government, violated the Fourth Amendment. We disagree with this contention, and affirm in part and reverse in part on other grounds.

BACKGROUND AND PROCEDURAL HISTORY

Defendant-appellant Perry G. Blocker, a Certified Public Accountant, was managing partner of the DeMiller, Denny, and Word accounting firm. Dan White, a codefendant, owned or controlled a number of companies in the finance and insurance fields. One group of those companies was collectively referred to as the Andrew Jackson Group. This group included Andrew Jackson Life Insurance Company (AJL), Andrew Jackson General Insurance Company, Andrew Jackson Casualty Insurance Company, and Andrew Jackson Corporation. White also owned a number of other companies in the finance and insurance fields. Blocker's accounting firm conducted the annual audit work for the Andrew Jackson Group and affiliated companies. After several years of providing financial advice to White, Blocker became the person in charge of running the Andrew Jackson Group.

Sometime in 1990, the Mississippi Insurance Department (MID) informed Blocker and White that there was a problem with the affiliation among the White-owned companies and their interdependent investments. Subsequently, in December of 1990, Blocker purchased AJL from White by signing a note.

Meanwhile, Thomas Gober was a contract employee of MID. MID contracted with Gober to conduct triennial examinations of the financial ability and condition of domestic insurance companies. Miss.Code Ann. § 83-1-25 (1972). During the course of his examinations of various Mississippi insurance companies' records, Gober discovered what he believed to be criminal violations. Gober informed his superiors at MID and was assured that he would not be held responsible for any problems with his reports. Nevertheless, to protect himself from any charges of wrongdoing, Gober later began to record surreptitiously conversations with various individuals at MID.

In the fall of 1990, while examining the records of an unrelated insurance company, it appeared to Gober that the company was stealing from its policyholders. Gober included Gober discussed his concerns with Jim Martin, a local attorney who arranged a meeting with FTC officials. At that meeting, Gober advised the FTC officials of his concerns. In response, they told him that he had a responsibility to notify the United States Attorney's office.

this information in his report and voiced his concern to his superiors at MID. He later learned that the Federal Trade Commission (FTC) might be investigating the matter and became worried that the allegations of wrongdoing would be deleted from his report.

Gober subsequently met with Assistant United States Attorney James Tucker in September 1990. At Tucker's request, FBI Agent Glen Breedlove was also at the meeting. The three discussed Gober's work as a certified financial examiner for MID, his conclusions that certain companies were violating the law, and MID's response to his conclusions. Gober shortly thereafter agreed to furnish the FBI with any evidence of criminal activity on the part of the Mississippi insurers or MID that he encountered during the course of his work.

Beginning in September of 1990, Gober met periodically with Agent Breedlove and federal prosecutors. At those meetings, Gober provided any evidence he encountered during his examinations that indicated criminal activity. Gober subsequently requested compensation for his time, and the FBI paid Gober at the same rate he was paid for his contract work for MID.

Additionally, the FBI provided Gober with a device for the clandestine recording of conversations that he had with officials of both MID and the insurance companies. Gober recorded all conversations because the FBI sought to avoid the accusation of selectively recording conversations. Blocker's name had been added to the FBI's monitoring list while he still was a partner at the accounting firm, prior to his purchase of AJL.

In March of 1991, the National Association of Insurance Commissioners (NAIC) sent out an annual report to the MID indicating that AJL was a "first priority" company that needed immediate regulator attention because of its low surplus and bond portfolio. MID thereafter notified Blocker that an examination was scheduled for August of 1991.

Gober was assigned to conduct the triennial examination of AJL. No one at AJL or MID knew of Gober's preexisting cooperative relationship with the United States Government. Gober began recording Blocker's conversations at a meeting between AJL officials and MID officers prior to the commencement of the actual examination of AJL.

Based on Gober's findings, and with Gober's assistance, Agent Breedlove prepared an affidavit to obtain a warrant to search the records of AJL and its affiliates. The search warrant was secured, and on February 7, 1992, the search warrant was executed, resulting in the seizure of voluminous records from AJL and its affiliates.

On June 9, 1993, a grand jury returned an indictment charging Blocker and White with aiding and abetting each other in the following offenses: 18 counts of mail fraud (defrauding the policyholders, investors, shareholders, and regulatory agencies of the Andrew Jackson Group of Insurance Companies in violation of 18 U.S.C. § 1341); and 2 counts of bank fraud (submitting false financial statements to federally insured financial institutions in violation of 18 U.S.C. § 1014). The indictment charged that Blocker and White aided and abetted each other in defrauding the policyholders, investors, shareholders, and regulatory agencies of the Andrew Jackson Group of Insurance Companies: AJL (owned by Blocker); Andrew Jackson General Insurance Company; and Andrew Jackson Casualty Insurance Company. More specifically, the indictment charged that Blocker and White engaged in deceptive practices to continue to receive insurance premiums and investments at a time when they knew that the companies involved were insolvent or impaired.

Blocker filed a motion to suppress the evidence found by Gober during his examination and the evidence seized pursuant to the warrant. The district court, after conducting a hearing, denied the motion in a memorandum opinion, rejecting Blocker's contentions that Gober in his examination was an agent

of the Federal Government and that the Mississippi statute that authorized the administrative examination violated the Fourth Amendment. After a two-week trial, a jury found Blocker guilty on the 18 counts of mail fraud and 2 counts of bank fraud. ¹ The district court sentenced Blocker to 97 months imprisonment and ordered restitution in the amount of $5,708,051.

ANALYSIS

I. DENIAL OF MOTION TO SUPPRESS

Blocker contends that the district court erred in denying his motion to suppress the evidence obtained by Gober prior to the execution of the search warrant and all the evidence seized pursuant to the warrant. He argues that Gober was acting as an agent or instrument of the Government when Gober gathered the evidence that resulted in his prosecution. "On appeal from the denial of a motion to suppress we review the district court's factual findings under the clearly erroneous standard and its conclusions of law de novo." United States v. Johnson, 16 F.3d 69, 71 (5th Cir.1994). This Court has treated the district court's determination whether a person is acting as an agent for the Government as a factual finding. United States v. Jenkins, 46 F.3d 447, 460 (5th Cir.1995). ²

It is well settled that if a private party wrongfully conducts a search or seizure of another's person or property the Fourth Amendment is not violated and that such private misconduct does not deprive the Government of the right to use evidence that it has obtained legally. Walter v. United States, 447 U.S. 649, 656, 100 S.Ct. 2395, 2401, 65 L.Ed.2d 410 (1980). The question is whether, in view of the circumstances of the case, the private party acted as an instrument or agent of the Government when he conducted the search. Coolidge v. New Hampshire, 403 U.S. 443, 487, 91 S.Ct. 2022, 2049, 29 L.Ed.2d 564 (1971). ³

To make such a determination, this Court, in recent years, has applied the test articulated by the Ninth Circuit in United States v. Miller, 688 F.2d 652, 657 (9th Cir.1982): (1) whether the Government knew or acquiesced in the intrusive conduct; and (2) whether the private party intended to assist law enforcement efforts or to further his own ends. Jenkins, 46 F.3d at 460; United States v. Pierce, 893 F.2d 669, 673 (5th Cir.1990); United States v. Bazan, 807 F.2d 1200, 1203 (5th Cir.1986), cert. denied, 481 U.S. 1038, 107 S.Ct. 1976, 95 L.Ed.2d 816 (1987). In each of those cases, we assumed that the Ninth Circuit's test was an adequate formulation. ⁴

The district court below, after considering all the facts and circumstances surrounding the MID audit and Gober's relationship with the FBI and United States Attorney's office,...